Energy regulator to review major tariff hike Monday as fertiliser sector faces supply crunch

A public hearing to assess proposals for a sharp increase in gas tariffs for state-run fertiliser factories will be held on Monday, amid growing concerns over energy costs and supply shortfalls.

The Bangladesh Energy Regulatory Commission (BERC) has scheduled the hearing at the BIAM Foundation auditorium in Dhaka, running from 10:00 am to 5:00 pm.

The session will begin with a presentation from Petrobangla, the state-owned oil, gas, and mineral corporation, which is seeking a 150% hike in the natural gas tariff—from Tk 16 to Tk 40 per cubic metre—for government-owned fertiliser plants. The proposed increase is aimed at financing the import of additional liquefied natural gas (LNG) to address chronic supply shortages.

Petrobangla’s proposal is backed by its subsidiary gas marketing and distribution companies, including Titas Gas Transmission and Distribution Company, Bakhrabad Gas Distribution Company Ltd, Jalalabad Gas Transmission and Distribution System Ltd, Sundarban Gas Company Ltd, Pashchimanchal Gas Company Ltd, and Karnaphuli Gas Distribution Company Ltd. Each has submitted separate but aligned proposals to BERC in support of the tariff revision.

Ahead of the hearing, BERC invited stakeholders to register by 28 September and submit written comments by 30 September. The regulator is expected to weigh public feedback alongside technical and financial justifications.

According to officials, Petrobangla plans to import at least seven additional LNG cargoes using the proceeds from the proposed tariff hike. These imports are intended to ensure an uninterrupted gas supply to fertiliser factories, which have faced repeated shutdowns due to fuel shortages.

If approved, the revised tariff would enable Petrobangla to supply 250 million cubic feet per day (mmcfd) of gas during the peak fertiliser production season (October to March), 165 mmcfd in April and May, 175 mmcfd in June, and 130 mmcfd from July to September.

The increased tariff would also allow Petrobangla to raise its annual LNG imports to 115 cargoes—up 6.48% from the current 108. However, even with the hike, the company anticipates a deficit of Tk 83.55 billion if the additional cargoes are procured. Petrobangla expects this shortfall to be covered through government subsidies.

The blended cost of gas—factoring in domestic and imported sources—would rise to Tk 28.78 per cubic metre from the current Tk 24.56, reflecting the higher share of LNG in the energy mix.

This is not the first time fertiliser factories have faced tariff adjustments. In June 2022, BERC raised the gas tariff for these units by 259.55%, from Tk 4.45 to Tk 16 per cubic metre. Despite the increase, fertiliser factories have struggled to pay their gas bills. As of June 2025, they owed approximately Tk 10.39 billion to various gas distribution companies.

Petrobangla submitted the latest tariff proposal after consultations with the Bangladesh Chemical Industries Corporation (BCIC), which operates the state-owned fertiliser factories, and the Ministry of Industries.

Currently, four fertiliser plants—Jamuna Fertilizer Factory, Ashuganj Fertilizer and Chemical Company Ltd (AFCCL), Chittagong Urea Fertilizer Ltd (CUFL), and Karnaphuli Fertilizer Company Ltd (KAFCO)—remain shut due to gas shortages. Their combined gas requirement is estimated at 212 mmcfd.

Bangladesh’s demand for urea fertiliser stood at 1.56 million tonnes in FY2024–25, down from 1.748 million tonnes in the previous fiscal year. To meet non-urea fertiliser needs, the government spent US$1.04 billion last year.

In a related move, the government recently revised the gas tariff for KAFCO, a joint venture fertiliser company, raising it to Tk 30 per cubic metre.

Azizjst@yahoo.com